The Online Art Market in 2020: An Overview
While there is a general trend across the entire economy to increase internet transactions and cut costs by reducing face to face meetings, a closer look into the nature of ‘digitalisation’ will reveal that the fundamental structure of the art market is unlikely to change. Evidence collected for 2020 reveals that the market will continue to be dominated by a few big fine art galleries, while Christie’s, Sotheby’s and Phillips will continue to rule the world of antiques and collectibles.
COVID-19 forced the art world into an abrupt lockdown resulting in promotions and sales being solely handled online. It’s no surprise, then, that many anticipate that COVID-19 could kick-start the art world’s digital remaking. The online art market is going through some potentially transformational changes, and some of these changes are set to last. Some experts believe that social distancing will change how we buy art. Without the joy and pain of crowded art fairs and gallery openings, dealers will have to find new ways to generate the excitement that helps collectors buy art on impulse.
The trend is changing
In 2019, the online art and collectibles market grew at a mere 4%, but figures for 2020 are expected to be much larger as the art world is forced to complete more transactions online. Since 2015, we have seen market growth rates on a steady decline, with online sales dropping from 24.1% in 2015 to 9.8% in 2018. The decline in growth comes on the back of the slowdown of the global art market sales last year, with a 20% fall in the value of auction sales for Sotheby’s, Christie’s and Phillips. Data from the Art Basel Art Market Report 2020 tells a similar story, suggesting global art sales fell 5% over the same period.
Despite a decline in overall auction sales, both Christie’s and Sotheby’s saw increases in sales completed online. In total sales, Christie’s, Sotheby’s, and Phillips generated $370 million in the first half of 2020, an increase in five-fold over the same period in 2019.
The stubborn reluctance from much of the commercial art world to properly embrace the digital realm is one of the main reasons for the sluggish growth in online sales last year. However, during the lockdown everything from museum exhibitions to art fairs and auctions migrated online, giving rise to a wide and innovative range of online initiatives.
It’s highly unlikely the art world will revert entirely back to the old as we emerge from the crisis. Social distancing has forced a new form of online engagement which might forever alter the way the art market and its stakeholders approach their digital presence.
65% of online sales platforms believe that the current crisis will result in a permanent shift, with the online marketplace becoming a natural part of the art sales business (which includes galleries, dealers, auctions, and advisors). Nevertheless, several platforms are cautioning that just because online sales have benefited from the current crisis, in the long-term, a prolonged economic downturn could hurt online platforms with higher overheads.
Over half of online art platforms believe the online art market will remain focussed on collections, with certain platforms dominating specific segments (such as photography, prints, furniture, or design). Fine Art accounted for the majority of online art sales, and while this segment of the market led the way in 2020, but there is visible growth in other segments, like jewellery and memorabilia.
Big Galleries are likely to emerge as key online players
Some 63% of online platforms expect galleries to emerge as big online players when they finally embrace digital technology. Large galleries, such as David Zwirner and Hauser & Wirth, have taken the concept of online gallery platforms to another level by offering smaller galleries and art fairs the opportunity to exhibit and sell via their technology platforms, turning these major galleries into third-party online sales platforms.
The consensus that most sales platforms hold is that the online art market will be dominated by a few global players within the next five years. We could start to see galleries asserting greater control over their digital presence, which means their relationship with third-party platforms might change. This could also mean a shift from providing e-commerce solutions to more traditional advertising platforms to help drive traffic to galleries’ online viewing rooms.
While the ten biggest platforms globally account for approximately 68% of the total online market, some think disruption from an outsider is a real possibility. It’s likely that an existing company like Amazon or even a startup with superior technology could disrupt the art and collectibles market. The tougher market conditions imposed by COVID-19 could speed potential consolidation up, or even trigger an acquisition spree among the stronger players, including traditional auction houses keen on building a stronger online presence.
Big-Tech in the Art World
Apart from the innovation offered by traditional players in the art economy, tech giants and public institutions are also pushing for arts’ increased digital presence. Google Arts and Culture, set up in 2016, collaborated with more than 500 museums and galleries across the globe to provide virtual tours and online exhibits, allowing people to visit many major art museums and peruse their collections from the comfort of their own home.
An increasing number of museums are promoting digital archives, videos, and performances via YouTube. The Serpentine Gallery has been using ‘Twitch’, a popular live streaming platform for gamers, to live stream some of its exhibitions and performances. The Metropolitan Museum of Art (The Met) for example, has a whole series of videos called The Met 360°, which explores the museum’s various buildings and spaces.
On social media, the museum community is becoming increasingly active on Twitter with several museums sharing facts, videos, and insights about their collections with the hashtag #museumfromhome. Since the advent of social distancing, art fairs were also forced to leverage online alternatives. Art Basel’s second edition of its ‘Online Viewing Rooms’ 19-26 June, a virtual substitute for their flagship fair in Basel, reportedly saw many multi-million transactions taking place during the online VIP preview.
After three months of effectively an entirely digital art market, it is clear that collectors are building their confidence and trust in transacting online. This suggests that the price ceiling in the online art market is increasingly pushed upwards. For the majority of traditional art world operators, the pandemic has exposed an over-dependence on certain traditional sales and promotional channels (physical art fairs, gallery exhibitions, auctions, etc.) and how vulnerable they are with such limited digital strategies in place. An online presence is more likely now than ever before to keep the art world afloat and is providing a fast-track for the lagging digital transformation we have seen within the wider art industry.